First-time homebuyers ruled in 2018

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Published Date 3/4/2019

First-time homebuyers appear to have fueled the real estate market in 2018. According to a Hanley-Wood report, a total of 2.07 million first-time home buyers purchased single-family homes in 2018, up less than 1% from 2017 but the most since recessionary 2006, according to a report from Genworth Mortgage Insurance, an operating segment of Genworth Financial, Inc.

The report said that first-timers again outperformed the broader housing market, recording its best purchase year since 2006 and regaining its pre-Housing Crisis level, according to Genworth's Chief Economist Tian Liu. "At the same time, first-time home buyers are not immune to declining affordability, as their number declined nationally and in 35 states in Q4. First-time home buyers responded to declining affordability by taking a wait-and-see approach and opportunistically looking for lower-priced properties.”

Liu predicts that some first-time home buyers may be in fear of overpaying during the slowdown which could prolong the slowdown. But improved housing affordability over the past few months (if sustained) has the capacity to boost momentum by the 2019 spring selling season. “In the longer term, the current slowdown should serve to remind the housing industry and policymakers of the importance of housing affordability,” the article said. “The housing industry should also take note of the resilience of the first-time home buyer market in the downturn and offer more products and services to meet their needs.”

Also of note looking back, first-time home buyers accounted for 99% of the growth in home sales between 2014 and 2018, reshaping the demographics by moving from states such as California, Illinois, Massachusetts, Michigan, Louisiana, New York and Texas, and into states such as Arizona, Florida, Georgia, Delaware, Idaho and Nevada.

Source: Hanley-Wood, TBWS

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